International Journal of Agriculture and Forestry 2012, 2(1): 35-40

DOI: 10.5923/j.ijaf.20120201.06

Resource Use Efficiency in Rice Production: the Case of

Kpong Irrigation Project in the Dangme West
District of Ghana
Fred Nimoh1, Enoch Kwame Tham-Agyekum2,*, Philip Kwaku Nyarko1

1
Department of Agricultural Economics, Agribusiness and Extension, KNUST, Kumasi
2
Department of Agricultural Extension, University of Ghana, Legon, Accra

Abstract This study was conducted to determine the efficiency of resource use in rice production with the Kpong Irri-
gation Project (KIP) as a case study. Seventy farmers were selected using the simple random sampling technique. The
Cobb-Douglass production function was used to estimate the coefficients of the various variables analysed and MPP, MVP
and allocative efficiency index were also used to estimate the efficiency of resource use in the study area. The regression
results showed that the farmers were in the second stage of production, which is, decreasing returns to scale (using the elas-
ticities). The results of the efficiency computation indicated that land (6.63), fertilizer (1.76) and seed (10.84) were being
underutilized and labour (0.000036) and chemicals were being highly over utilized in the study area. The study recom-
mends that KIP should embark on repair works on the roads, provide appropriate machinery services and desilting the
drains.
Keywords Cobb-Douglas Function, Efficiency, Kpong Irrigation Project, Resource Use, Rice

will more than triple by 2020. Fertilizer is a powerful pro-

1. Introduction
Rice production is carried out with certain inputs or re-
sources which enhance its productivity. The extent to which
this productivity can be affected by these inputs depends on
how the inputs are used. For instance, when a piece of land is
being cultivated, its productivity will depend on the re-
sources that are applied to it, but more importantly on how
these resources are used or applied. Efficient use of resources
has to do with the amount to be applied to the land in terms of
quantities and their prices. That is to say the inputs must be
applied in the quantities that would give the most output and
at the same time the costs involved in using them must also
be as low as possible. Hence, when the best resource is used
in their right quantities and at the minimum possible cost to
produce a certain output then efficient use of resources is
achieved.
According to Yanggen et al., (1998), to increase rural in-
comes and meet growing food demands Sub-Saharan Africa
(SSA) must improve agricultural productivity. SSA is the
only developing region where per capita food production has
been declining; the region now has the largest cereal deficits
in the world. If there is no change in productivity, deficits
* Corresponding author:
donsprakels@yahoo.com (Enoch Kwame Tham-Agyekum)
Published online at http://journal.sapub.org/ijaf
Copyright © 2012 Scientific & Academic Publishing. All Rights Reserved
ductivity-enhancing input, but Sub-Saharan Africa uses very
little. This is not to say that it is only fertilizer that is being
underutilized but also other inputs like fungicides, pesticides,
tractor services and labour. Some farmers even go to the
extent of eliminating some of these inputs altogether.
In recent years (2001–2005), rice production in Ghana has
been expanding at the rate of 6% per annum, with 70% of the
production increase due mainly to land expansion and only
30% being attributed to an increase in productivity (Sank-
hayan, 1983). This is to say that when the current area under
cultivation is maintained and efforts towards increasing
productivity are made then there can be a drastic increase in
production.
It is widely recognized that the improvement of agricul-
tural productivity is critical for poverty alleviation and
economic growth in sub-Saharan Africa, where agriculture is
the primary source of livelihood for about 65 percent of
population (Sakurai et al., 2006). Ghana has a wide area of
land that could be cultivated. Out of the total agricultural
land of 13.6milion hectares about 2million is considered
suitable for large scale rice production (MoFA, 1999). Also
records have shown that the demand for rice has been in-
creasing at an average of 3.6%, but output has been de-
creasing at an average rate of 1.71% (Asare, 2000). With an
average yield ranging between 1.0 to 1.5 tons per hectare,
which is low comparative to achievable yields ranging be-
tween 2.5 to 6.0 tons per hectare which recent researches
36 Fred Nimoh et al.: Resource Use Efficiency in Rice Production: the Case of Kpong Irrigation Project
in the Dangme West District of Ghana

have come out with (NARP). Due to this difference between and LI is labour input.
the average yields and achievable yields, it has created the In this study, three different production functions, namely;
need for import of rice to fill the supply gap. Rice accounts linear, semi-log, and double log (Cobb Douglas) were em-
for 42.3% of all cereal imports as well as 16.5% of all cereals ployed to evaluate the productivity of key production factors
grown in Ghana. The question therefore is, is it inefficient for rice production in the study area, and the one that gave
use of resources that results in low yields? the best fit was chosen. The double-log function (Cobb-
Douglas) provided the best fit and was therefore chosen for
the study (Olomla, 1991; Mbata et al., 1993).
2. Research Questions Using the ordinary least square (OLS) estimator, the
 How can output of rice be increased without necessarily production response function model was expressed implic-
increasing the land size? itly as:
 What are the resources available for rice production in Y = f ( X 1, X 2, X 3, X 4, X 5, Ui) (1)
the study area? Where Y = the quantity of paddy in kilograms, X 1 =
 Is rice production worthwhile in the study area? Land (farm size in hectares), X 2 = Labour (man-days), X 3
 What quantities of these resources are currently being = quantity of fertilizer in kilograms, X 4 = volume of
used for rice production in the study area? chemicals in liters, X 5 = quantity of seed in kilograms.
 What is the average yield per hectare currently in the The functional form of the double-log function was ex-
study area? pressed as follows:
 What costs are the farmers incurring in the rice pro- InY= b0 +b1 InX 1 + b2 InX 2 + ............................ + b5 InX 5 + e (2)
duction process currently in the study area? The marginal physical product (MPP) was given by:
MPPi= bi × APPi (3)
3. Methodology Where bi = elasticities of the various inputs
The Dangme West District is situated in the South Eastern APPi = Y (4)
part of Ghana. This study is limited to the Kpong Irrigation Xi
Project; therefore the population of the study was limited to Where y is the mean of output and x is the mean of factor
only farmers under the Irrigation project. Currently under the inputs, and bo and bi are the constant and regression coeffi-
Kpong irrigation Project, 2500 household heads have been cients, respectively.
assigned land for the cultivation of rice. These 2500 house- Using the above specifications and the output and input
hold heads form the population of this study. From the prices, the marginal value products (MVPs) and allocative
population, 70 rice farmers were randomly sampled for this efficiency index (AEI) were computed as follows:
study. Primary data was sought through administration of MVP
= i MPPi × Py (5)
structured questionnaire. Also secondary data on the average MVPi
paddy rice output over ten-years was collected from the KIP AEI i = (6)
office. MFCi
Where, Py and MFCi, are the unit prices of output and
factor input respectively. The decision of whether a resource
4. Analytical Procedure is used efficiently or not, thus allocative efficiency, is based
Gross margin analysis was employed to assess the prof- on the value of AEIi. If AEIi is equal to one (AEIi = 1), then
itability of rice production in the study area on an average the factor input is efficiently utilized, hence the farmer is
basis. Gross margin (profit) according to Wood and Sangter considered allocative efficient (Hopper, 1965). The factor
(2002) is the excess of sales revenue over the cost of goods input is over-utilized if AEIi is less than 1 (AEIi <1) and
sold (variable cost). That is, under-utilized if AEIi is greater than unity (AEIi > 1). The
GM = TR – TVC significance of each explanatory variable was determined
TVC = TOCI + LI using the t-test. The overall significance was determined by
Where GM is the gross margin, TR is total revenue, TVC the F-ratio.
is total variable cost, TOCI is total operating capital input,
Table 1. Descriptive Statistics of Farm Inputs
Output Seed Fert. Chem. Labour Land
Mean 4456.947 72.64286 666.2857 7.892857 2134.914 1.571429
Median 500.000 75.00000 575.0000 7.000000 2115.500 1.500000
Maximum 000.000 120.0000 1200.000 14.00000 6844.000 3.000000
Minimum 500.000 45.00000 300.0000 4.000000 1026.000 1.000000
Std. Dev. 116.953 23.80052 232.8162 2.998663 826.5010 0.627196
Skewness .204169 0.422462 0.339450 0.343709 2.695422 0.615800
Kurtosis .311222 1.833740 1.999792 1.814657 16.25507 2.429363
Jarque-Bera .870036 6.049342 4.262191 5.476283 597.2113 5.373859
Probability .392579 0.048574 0.118707 0.064690 0.000000 0.068090
Observations 70 70 70 70 70 70
Source: Computed from field survey data
 International Journal of Agriculture and Forestry: 2012; 2(1): 35-40
5. Results and Discussions
Major Inputs Used in Rice Production
The major inputs used in the production of rice in the
study area identified as land, water, labour, fertilizer,
chemicals and seed.
Land
Land happens to be one of the main inputs used in the
study area for rice production. KIP supplied land to all the
farmers registered under the project as farmers. Each farmer
is allocated one hectare of land which he/she is supposed to
put under cultivation. Some farmers in the study area use
more than one hectare of land. The farmers are able to ac-
quire more land not because KIP provided them more than
one hectare, but through a process called subletting where
farmers who for one reason or the other cannot cultivate
theirs and thereby giving to those farmers who actually want
more land to cultivate. From the results of the descriptive
statistics, the minimum land size is one hectare and the
maximum is three hectares with the mean being 1.57 ha. This
means that on the average people cultivate more than one
hectare. Nevertheless some farmers use as high as 7 ha of
land and they can be termed as outliers.
Water
Water is very essential to rice production in the study area.
KIP, as the name suggests is an irrigation project that is into
supplying water for all year round rice production. Without
this resource, the project would have not been in existence or
without water there would be no need for the irrigation pro-
ject. With this water, the farmers are able to produce without
worrying about water or rain. Since the farmers are supplied
with water on the basis of the amount of land they have,
water is captured in land for the analysis of efficiency of the
resource. Another reason why water was captured as part of
land was that, what the farmers paid per season is based on
the water they use. That is, if the farmer has the land and does
not cultivate it, he does not pay anything for it. Hence it
implies that what is paid for the use of land is based on water.
Labour
Labour as an input is very important; it cannot be entirely
eliminated from any production process. Even in the most
heavily mechanized systems of production, labour cannot be
entirely substituted for by machinery. At people are still
employed to operate the machines. Labour is employed to
Table 2. Average Gross Margin of rice production
Item Unit Price (GH¢)
Rice Output (RO)
Capital Operating Inputs (C.O.I.)
Fertilizer
Seed
Chemicals
Machinery
Total COI cost
Labour input
Total variable cost (TVC)
Gross margin (RO-TVC)
Source: Computed from field survey data
37
make sure that all other inputs are applied. That is, labour in
fact makes it possible that all activities that need to be per-
formed in the production of the rice are performed. The
results of the survey showed that the maximum labour was
6844 man-days with 1026 man-days being the minimum and
the mean labour in the study area was 2135 man-days.
Fertilizer
Fertilizer as a major input in rice production is not ex-
cluded from rice production in the study area. The land al-
located to the farmers is the land they have to cultivate over
and over again every year. The land has no rotational scheme
with which to revitalize the land. In view of this, the only
thing that enhances the productivity of the land is the use of
fertilizers. Fertilizers as used here refer to inorganic fertil-
izers. It was observed that the mean amount of fertilizer used
in the study area was 666kg with maximum and minimum
being 1200kg and 300kg respectively.
Seeds
Seeds are the paddy rice used for the production of rice.
Some farmers in the study area prepare their own seed,
which is from the previous harvest whiles others buy those
grown by the certified seed growers. KIP has identified some
farmers who are good in the production of rice in the study
area. These farmers are given guidance and direction by the
agricultural extension agents. Their activities are also
monitored to make sure that the seeds produced meet the
required standards that every certified seed should have. On
the average, farmers in the study area use 72.64kg of seed
with the maximum and minimum being 120kg and 45 kg
respectively.
Chemicals
The chemicals used by the farmers are weedicides and
insecticides. The method of land preparation employed in the
study area is mainly chemical weed control. Also with pest
control, the farmers’ use chemicals like karate, dusban, cerox
etc. In this study, the weedicides and the insecticides were
put together for the sake of convenience and used for the
analysis. The chemicals are very important in the production
of rice and cannot be eliminated. Most of the farmers do not
do the slush and burn anymore and they resort only to the
chemical weed control. Farmers assigned the reason that the
land is not normally weedy at the start of the season because
the same land is cultivated for two seasons in a year.
Unit/ha Value/ha (GH¢)
1.00 5500 5500
1.02 424.40kg 431.20
1.08 46.30kg 50.00
8.50 5.03 l 42.76
120.0 1 season 120
763.96
2.50 2135 5337.50
5294.46
205.54
38 Fred Nimoh et al.: Resource Use Efficiency in Rice Production: the Case of Kpong Irrigation Project
in the Dangme West District of Ghana

Table 3. Correlation Matrix of the Inputs

LNOUTPUT LNLAND LNLABOUR LNFERT LNCHEM LNSEED
LNOUTPUT 1 0.7568 0.4250 0.7286 0.5069 0.7050
LNLAND 1 0.4745 0.9118 0.8257 0.9109
LNLABOUR 1 0.4539 0.4967 0.3949
LNFERT 1 0.7684 0.8299
LNCHEM 1 0.7701
LNSEED 1
Source: Computed from field survey data

Table 4. OLS Estimates of Coefficients

Dependent Variable: LNOUTPUT
Included observations: 70
Variable Coefficient Std. Error t-Statistic Prob.
LNLAND 0.441143*** 0.172565 2.5564 0.0130
LNLABOUR 0.112767* 0.067196 1.6782 0.0982
LNFERT 0.180388 0.130479 1.3825 0.1716
LNCHEM -0.2922*** 0.089904 -3.2499 0.0018
LNSEED 0.1361 0.144824 0.9415 0.3500
C 6.1898 1.101333 5.6203 0.0000
R-squared 0.6468 Mean dependent var 8.3701
Adjusted R-squared 0.6192 S.D. dependent var 0.2591
Log likelihood 32.1403 F-statistic 23.4363
Durbin-Watson stat 2.1137 Prob(F-statistic) 0.0000
Source: Computed from field survey data
Note: *** and * represents significance at 1%and 10% respectively

Average Gross Margin of Rice Production
It can be observed that rice production is profitable on an
average gross margin basis by GH¢205.54. The production
of rice in the study area can be very profitable if the inputs
for rice production are combined efficiently. The cost item
that drastically reduces the profit of rice production in the
study area is the labour cost. If this cost is reduced, the
profitability of rice production in the study area will be high.
Correlation Matrix of the Inputs used
It can be seen that land, fertilizer and seeds are highly
correlated that is over 70%. Labour on the other hand has a
low correlation with the output that is 43%. Also chemicals
have a correlation of 51%. These correlations show how the
value of output is dependent on the explanatory variables.
Descriptive Statistics of Data Used to Analyse Efficiency
The data used for this analysis as that collected on land
(farm size), labour fertilizer, chemicals and seed. Natural log
of these inputs were taken to analyze the data. The mean of
the dependent variable, (output) is 8.37, the means of the
independent variables are as follows; land – 0.38, labour –
7.61, fertilizer – 6.44, chemicals – 1.99, and seed – 4.23.
Analysis of the Efficiency of the Resources Used in Rice
Production
The Cobb-Douglass production function was employed to
empirically analyse the cross-sectional data sampled from
the rice farmers. The Cobb-Douglass production function
estimates the elasticities of the various inputs used in rice
production. The elasticities indicate the scale of production
of the various inputs. If the elasticity is greater than one, it
indicates an increasing return to scale, if less than one, it
indicates a decreasing return to scale. However, if it is equal
to one the function is said to exhibit a constant returns to
scale. An increasing return to scale implies that when all
other variables are held constant, a unit increase in one of
them results in more than proportionate increase in output.
On the other hand, a decreasing return to scale implies that a
unit increase in one variable with the others held constant
results in a less than proportionate increase in output. For a
constant returns to scale, with all other inputs held constant a
unit increase in one will result in a proportionate increase in
output.
From the regression analysis, the partial elasticities: β1
(0.441143), β2 (0.112767), β3 (0.180388), β4 (-0.292182) and
β4 (0.136358) of the various variables indicated decreasing
returns to scale, and the total elasticity (sum of the partial
elasticities) also showed decreasing returns to scale. The
result of the estimate showed that land and chemicals were
significant at 1%, and labour was significant at 10%. This
implies that these variables are the major contributors of the
61.92% (adjustedR2) variations in the dependent variable.
Results of the ordinary least square (OLS) estimates of the
parameters for the sampled farms showed that output (paddy
rice) was positively related to land (farm size), labour, fer-
tilizer and seed, but was negatively related to chemicals used.
This implies that output increased with quantities of land
(farm size), labour, chemical pesticide, and seed, but de-
creased with increased quantity of fertilizer [Place Table 5
here]. The allocative efficiency of land (6.63) shows that too
little of land is being used by the farmers in the study area
that is to say the cost of using land is small compared to the
value marginal product. This suggests that the farmers can
incur more cost in land so as to be efficient.
 International Journal of Agriculture and Forestry: 2012; 2(1): 35-40
Table 5. Coefficients, Marginal Physical Products (MPP), Marginal
Product (MVP), Factor Cost (MFC), and Allocative Efficiency Index (AEI)
Variable Coefficients MPP MVP MFC
land 0.44 1.25 1250 188.4
labour 0.11 0.00023 0.23 6402 0.000036
Fert 0.18 1.20 1200 680.72
Chemicals -0.29 -0.16 -160 45.76
Seed 0.14 8.55 8550 788.4
Source: Computed from field survey data.
The efficiency of labour (0.000036) shows that the input
labour is being over utilized in the study area, this means that
more cost compared to the value of the marginal product of
labour. Also, the efficiency of fertilizer (1.76) indicates that
fertilizer is also being underutilized in the study area. The
cost incurred in using fertilizer is small compared to the
value of the marginal product of fertilizer.
The efficiency of chemicals on the other hand gave a
negative figure (-3.50), and this is an indication of the fact
that the input chemical is being used to an extent that any
increase in its use brings about a decrease in output. The
input seed also gave an efficiency value of 10.84, indicating
that the cost of using seed is very low compared to the value
of the marginal product of seed hence there is room for in-
creasing the use of seed. The analysis is performed for rice
production. This analysis shows there is considerable room
for improvement in the productivity of the production proc-
ess in the study area. The results of this study suggest that,
farmers could increase output and household income
through better use of available resources. The achievement
of efficiency in all the inputs and for that matter their total-
ity will very much depend on increasing all the inputs that
need to be increased, and reducing all those that need to be
decreased.
Problems Encountered By the Farmers
The access roads that link the fields to the main roads are
in a deplorable state in the study area. This problem is worst
during the rainy season. During the rainy season the roads
get wet, potholes are formed, and they become immotorable.
The bad state of the access roads makes it difficult for the
farmers to cart the paddy form the fields to the main road so
they have to employ casual labour to move these paddy
from the farm to the roadside. This brings extra cost to them
as they pay on per bag basis. All the farmers interviewed
cited this particular problem. This means that it is a homo-
geneous problem in the study area.
There was also unavailability of appropriate machinery.
For instance there is no combine that can harvest when the
land is wet. Through direct observation it was realized that
farmers lose a lot of the paddy during harvesting when they
use the manual harvesting. All the farmers interviewed
(100%) cited this problem.
After harvesting, the farmers dry the paddy to the mois-
ture content suitable for storage. Where to do this drying is
therefore the problem. About 61% of the farmers stated this
problem. The drying floors available for the farmers to dry
their paddy is very limited and in a season when many
farmers go into production it is difficult to dry the paddy to
39
its desired moisture content for storage. The effect of not
drying the paddy right after harvest is that some people
AEI
have their rice going mouldy and this means loss to them.
6.63
The fields have drains that are supposed to take the waste
1.76 waters away from the fields. Virtually these drains are non
-3.50 functional that is most of them are choked and this poses a
10.84 lot of problems for the farmers. Some of these problems
include flooding of the fields when they are to be drained,
also farmer who have flooded fields have to pay extra for
harvesting, some of the flooding continues even when the
fields are not being cultivated and this makes it difficult for
the owners of those lands to crop during the cropping sea-
son. Parts of the main drains have been choked and in fact
some have never been desilted since the completion of the
development of the project. 70% of the farmers interviewed
are affected by this problem.
Table 6. Problems Encountered By Rice Farmers in the Study Area
Problem Frequency Percentage
Poor access roads 70 100
Appropriate machinery 70 100
Birds 70 100
Choked drains 49 70
Limited drying floors 43 61
Untimely loans 30 43
Weather factors 26 37
Source: Computed from field survey data
Also birds are a nuisance to the farmers in the study area.
This problem is an issue to all the farmers in the inter-
viewed. These birds normally are problems to those farmers
who do not start the season early. The farmers who most
often fall victims to these birds are those delayed by the
Agricultural Development Bank (43%) of the farmers are
victims of ADB’s delays (see appendix). The control for
these birds is the scaring that the farmers do. The more the
birds the more labour the farmer has to employ in order to
curb the situation. This then in the long run increases the
cost of the farmers. The birds have the capability of making
the farmer leave the farm. That is they can make people so
frustrated that all they have left to do is to neglect the farm.
Weather factors also affect the yield of output. This
problem was stated by 37% of the farmers (see appendix).
Yields during the minor seasons are usually lower than that
of the major season’s yields. During the minor seasons
temperatures are usually higher than that of the major sea-
sons also humidity is low hence the conditions are not the
same for both seasons. Some farmers attribute the lower
yields during the minor season to low rainfall during these
periods meaning that rainfall also plays a part in the yield of
rice even in an irrigated field [Place Table 6 here].
6. Conclusions and Recommendations
The cultivation of rice in the study area is profitable by
GH¢205.54 on a gross margin basis. The regression results
showed that the farmers were in the second stage of produc-
40 Fred Nimoh et al.: Resource Use Efficiency in Rice Production: the Case of Kpong Irrigation Project
in the Dangme West District of Ghana
tion; that is, decreasing returns to scale (using the elastic-
ities). The results of the efficiency computation indicated
that land (6.63), fertilizer (1.76) and seed (10.84) were be-
ing underutilized and labour (0.000036) and chemicals were
being highly over utilized in the study area.
KIP should provide adequate machinery services so as to
reduce the labour input of the farmers. Also KIP should
takes on the repair works on the access roads to enable the
farmers to reduce to some extent their variable cost. The
farmers can form farmer based organizations (FBOs) to
provide some of these facilities for their own convenience,
the farmers can also form cooperatives and acquire certain
facilities like drying floors and combine harvesters, and also
bargain for higher prices for the rice. Government subsidies
can also help reduce the marginal factor cost and hence
improve efficiency.
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